LIQUID AUDIO TO LIQUEFY

Liquid Audio's board of directors has voted unanimously to dissolve the company and distribute its cash reserves to shareholders.

Under the decision announced Friday, shareholders will receive $2.50 per share on Dec. 20. Payments will only be made to shareholders of record as of Dec. 10.

The company will continue operations until the board considers all options for its assets. The distribution of assets ends a protracted battle over the future of the online music technology company.

"Liquid Audio will continue to operate while the board reviews any and all alternatives for maximizing stockholder value," the company said in a statement.

Signs of the Liquid's demise became apparent last month when CEO Gerald Kearby resigned shortly after the company pulled out of its proposed merger with Alliance.

Although the company was lauded by the recording industry for its copy protection technology, it could not compete with free file-swapping software such as Kazaa, Morpheus and of course, Napster.

In September, Liquid sold its digital encoding patents to Microsoft for $7 million.